The risk free rate with an adjustment for illiquidity, we note that in some instances the exclusion. Crisis-free Vietnam for the next few years. Million, according to international accounting standards, up from 3. These books contain ifrrs and tutorials to improve your practical skills, at all levels! Davidson shared a gripping first-person account about. The sheer volume of water used by open-pit mining means that it often depletes Page 1.

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LibraryThing is a cataloging and social networking site for booklovers. The Pillars 3. Presentation of financial statements 4. The Framework 4. Benefits earned over more than 1 period: Example 2: An inflow — income or liability?

Example 3: Staff costs — an asset? Contents continued … 5. IAS 1: Presentation of financial statements: Items with different functions Example 5: Items with different natures, but immaterial size Example 6: Items that are material in size, but not in nature or function.

Sale of a machine set-off is allowed Example 8: Sale of a machine set-off is not allowed Example 9: Cost of a machine set-off is required 6.

Reclassification of assets 6. Classification of liabilities 7. Liabilities and refinancing of due payments Example Refinancing of a loan 7. Breach of covenants. Contents continued … 7. Study materialgripping ifrs free download - Students Forum Sources of estimation uncertainty 7. Through the ages, very many languages developed; Latin, English, French, Spanish and Zulu, to name but a few. Now English, for instance, is used to communicate information and opinions to other English-speaking people or to those who are at least able to understand it.

Accounting is also a language, but one that is used by accountants to communicate financial information and opinions to other accountants and, of course, to those other interested parties who are able and willing to try to understand it. These rules are set out in detail and are commonly referred to as statements of generally accepted accounting practice GAAP. And this includes communication amongst accountants and amongst businesses!

The problem is that with so many different languages, communication between different nationalities can sometimes become almost impossible; picture the scene where an Englishspeaking New Zealander and a Swahili-speaking East African are trying to have a conversation.

Even when speaking the same language, there are some accents that make a conversation between, for instance, an English-speaking American and an English-speaking Briton, just as amusing. Accounting, as a language, is no different.

Almost every country has its own accounting language. The language GAAP used in one country is often vastly different to that in another country; so different, in fact, that it is like comparing French with Ndebele. These differences, however small, will still result in miscommunication.

Whereas miscommunication on street level often leads to tragedies ranging from divorce to war, miscommunication between businesses often leads to court cases and sometimes even final liquidation of the businesses. Its basic objective is to produce a language that is understandable and of a high quality. The process of harmonisation involves discussion amongst standard setters in any country wishing to be part of the process, during which the reporting processes currently used by these standard setters their local statements of GAAP are considered and then the best processes are selected to constitute or form the basis of the new international standard going forward.

Although most countries participating countries as at 5 November , www. This project is therefore expected to be a long and politically volatile one, but one which, in the end, will hopefully enable accountants all around the globe to communicate in one language. All countries that adopt the global accounting language, must comply with these rules IFRSs in their financial statements for financial periods beginning on or after 1 January Over the years, this committee developed 41 global accounting standards, referred to as International Accounting Standards IAS.

This new board adopted all 41 IASs and started the development of more global accounting standards. We now, therefore, have a total of 49 global accounting standards IFRS: These interpretations are developed when accountants and auditors notify the board of difficulties in understanding and applying certain parts of a standard. This committee developed 34 interpretations SIC 1 — SIC 34 , only 11 of which still stand, with the rest having been gradually withdrawn as a result of the harmonisation process.

In considering which ideas or combination of ideas to adopt as the new standard, they use what is referred to as the Framework. This framework sets out the basic objectives, characteristics, concepts, definitions, recognition and measurement criteria relevant for a good set of financial statements.

In summary, the rules of our global accounting language consist of: A tabular summary of the above is as follows: There are approx 40 members who meet three times a year. Develop and pursue the technical agenda, issue interpretations, basis for conclusions with standards and exposure drafts. They need 9 votes out of 14 to get standards, exposure drafts and interpretations published. The 12 members are unpaid but have expenses reimbursed. They meet every second month.

They make interpretations and consider public comments and get final approval from IASB. During the process of harmonisation, new ideas develop that result in changes having to be made to some of the existing standards and their interpretations. This is what is referred to as the Improvements Project. Before a new standard is issued, an exposure draft is first issued. The exposure draft may only be issued after approval by at least nine of the fourteen members of the IASB and is issued together with: Any interested party may comment on these drafts.

The comments received are thoroughly investigated after which the draft is adopted as a new standard either verbatim or with changes having been made for the comments received or is re-issued as a revised exposure draft for further comment. Statements of Generally Accepted Accounting Practice. Legally, financial statements must generally comply with the national statutory requirements of the relevant country. The problem is that most statutes laws of many countries currently require compliance with either generally accepted accounting practice or the statements of generally accepted accounting practice.

In addition to the requirements of the legal statute of the country, IAS 1 Presentation of Financial Statements requires that where companies do comply with international financial reporting standards and the interpretations thereof in their entirety , disclosure of this fact must be made in their financial statements. By implication, those companies that do not comply, may not make such a declaration. It is obviously beneficial to be able to make such a declaration since it lends credibility to the financial statements, makes them understandable to foreigners and thus encourages investment.

If you feel that there may be cracks in your foundation, right now is the time to fix them by revising your work from prior years. Please read this chapter very carefully because every other chapter in this book will assume a thorough understanding thereof. There are two areas of the global standards that make up these pillars: Presentation of Financial Statements. The Framework is technically not a standard but the foundation for all standards and interpretations.

It sets out the: IFRSs are designed to be used by profit-orientated entities commercial, industrial and business entities in either the public or private sector when preparing general purpose financial statements i. Presentation of financial statements. IAS 1 builds onto the Framework and in some areas tends to overlap a little. Study material These are discussed in more depth under overall considerations see Part 5: The four main qualities that a set of financial statements should have are listed as follows: Although one must try to achieve these qualitative characteristics, the Framework itself admits to the difficulty in trying to achieve a balance of characteristics.

For example: This emphasis on speed may, however, affect the reliability of the reports. If the four principal qualitative characteristics and the Standards are complied with, one should achieve fair presentation, which is the sixth and final attribute listed in the Framework. A user will use financial statements to predict, for example, the future asset structure, profitability and liquidity of the business and to confirm his previous predictions. The predictive and confirmatory role of the financial statements is therefore very important to 9 Chapter 1.

By way of example, unusual items should be displayed separately because these, by nature, are not expected to recur frequently; materiality of the items: Consider the materiality of the size of the item or the potential error in user-judgement if it were omitted or misstated; nature: For example, reporting a new segment may be relevant to users even if profits are not material. Materiality is a term that you will encounter very often in your accounting studies and is thus important for you to understand.

The Framework explains that you should consider something an amount or some other information to be material: For example, all revenue types above a certain amount may be considered to be material to an entity and thus the entity would disclose each revenue type separately.

Sometimes events or transactions can be so difficult to measure that the entity chooses not to include them in the financial statements. The most common example of this is the internal goodwill that the entity is probably creating but which it cannot recognise due to the inability to clearly identify it and the inability to measure it reliably.

A typical example here is a lease agreement the legal document. This lease is referred to as a finance lease, but as accountants, we will recognise the transaction as a purchase and not as a pure lease. The idea behind prudence is to: This is because omission of information could be misleading and result in information that is therefore unreliable and not relevant. Immaterial items may be excluded if too costly to include.

As a result of requiring comparability, users need to be provided with information for the comparative year and should be provided with the accounting policies used by the entity and any changes that may have been made to the accounting policies used in a previous year. These constraints are essentially time and money: Bearing in mind that only fresh information is relevant, the financial statements of a business are not relevant to a user in who is trying to decide whether or not to invest in that business.

The problem is, in the rush to produce relevant and timely financial statements, there is a greater risk that they now contain errors and omissions and are thus unreliable. This balancing act is compounded by the constraint of cost. Money is obviously a constraint in all profit organisations whose basic idea is that the benefit to the business should outweigh the cost. To produce financial statements obviously costs the business money, but this cost increases the faster one tries to produce them due to costs such as overtime and the better one tries to do them more time and better accountants cost more money.

Businesses often 11 Chapter 1. It should be remembered, however, that the benefits are often hidden. If the user or bank is suitably impressed by your financial statements, the business may benefit by more investment, higher share prices, lower interest rates on bank loans and more business partners, ventures and opportunities.

Once recorded, the element will be included in the journals, trial balance and then in the financial statements. An item may only be recognised when it: The basic recognition criteria are as follows: Assets or liabilities must meet the recognition criteria in full must be measured reliably and the flow of benefits must be probable.

Income or expenses need not meet the recognition criteria in full: It is important to read the definition of income and expense again and grasp how these two elements may only be recognised when there is a change in the carrying amount of an asset or liability. This means that for an item of income or expense to be recognised, the definition of asset or liability would first need to be met.

To do this, we need an amount. There are a number of different methods that may be used to measure the amounts of the individual elements recognised in the financial statements, some of which are listed below: There are a variety of combinations of the above methods, many of which are largely dictated by the relevant standard. For instance, assets that are purchased with the intention of resale are measured in terms of IAS 2: Inventories, which states that inventories should be measured at the lower of cost or net realisable value.

Assets that are purchased to be used over more than one period are measured in terms of IAS Property, Plant and Equipment, which allows an asset to be recognised at either historical cost or fair value determined in accordance with a discounted future cash flow technique: Redeemable debentures a liability are measured in terms of IAS Financial Instruments: Recognition and Measurement. Although most companies seem to still be measuring many of their assets at historical cost, there appears to be a definite interest in fair value accounting, where present values and current costs are considered more appropriate than historical cost.

There is an argument that says that the historical cost basis should be abandoned and replaced by fair value accounting since the generally rising costs caused by inflation results in the historical amount paid for an 13 Chapter 1.

A problem with fair value accounting, however, is its potentially subjective and volatile measurements which could reduce the reliability of the financial statements.

The possibility of reduced reliability could be the reason why most companies still use historical costs for many of their assets, where the latest fair values are disclosed in their notes for those users who are interested. Once recorded, the element will be included in the journals, trial balance and then channelled into one of the financial statements: Some items that are recognised may require further disclosure.

Where this disclosure involves a lot of detail, this is normally given in the notes to the financial statements.



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LibraryThing is a cataloging and social networking site for booklovers. The Pillars 3. Presentation of financial statements 4. The Framework 4.

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